Policy Update
Ninchen Tamang
Background
India’s 2022 amendment to the Weapons of Mass Destruction (WMD) Act strengthened the legal framework for preventing the financing of activities involving weapons of mass destruction and their delivery systems. It introduced an express prohibition on such financing and empowered the Central Government to freeze, seize or attach relevant assets. Subsequent government orders established procedures for implementing these powers. However, establishing a legal framework is not the same as demonstrating its effectiveness. The Financial Action Task Force (FATF) recognised progress in India’s counter-proliferation-financing framework in its 2024 assessment while identifying implementation challenges. The amendment’s impact must therefore be assessed by distinguishing legal progress from evidence of practical implementation.
The Weapons of Mass Destruction and Their Delivery Systems (Prohibition of Unlawful Activities) Act, 2005, provides India’s legal framework for prohibiting specified unlawful activities involving biological, chemical and nuclear weapons and their delivery systems. It addresses activities such as the manufacture, acquisition, possession, development, transport and transfer of prohibited weapons and related materials. It also regulates relevant exports and seeks to prevent prohibited transfers to non-State actors (Government of India, 2005; PRS Legislative Research, 2022).
However, preventing the movement of prohibited weapons and materials is only one part of counter-proliferation. Financial transactions supporting procurement, transportation and associated networks also require attention. The government presented the 2022 amendment as a response to this gap, citing India’s international obligations under United Nations Security Council resolutions and FATF standards on counter-proliferation financing (Lok Sabha, 2022).
FATF incorporated proliferation-financing requirements into its standards in 2012. These requirements call on countries to implement targeted financial sanctions to prevent and disrupt the financing of the proliferation of weapons of mass destruction. Such measures include restricting access to funds and economic resources belonging to, owned or controlled by designated persons and entities (FATF, 2024).
The amendment followed a short legislative process:
- 5 April 2022: The amendment Bill was introduced in the Lok Sabha.
- 6 April 2022: The Lok Sabha passed the Bill.
- 1 August 2022: The Rajya Sabha passed it by voice vote.
- 6 August 2022: The President gave assent.
- 8 August 2022: The Act was published in the Gazette of India as Act No. 14 of 2022.
- 10 November 2022: The amendment came into force under Notification S.O. 5230(E) (Ministry of Law and Justice, 2022; Ministry of External Affairs, 2022).
The amendment inserted Section 12A into the 2005 Act. Rather than replacing the existing legislation, it strengthened the framework by addressing proliferation financing and introducing associated asset-freezing powers.
Functioning
Section 12A establishes the central legal basis for preventing proliferation financing. Its provisions can be understood under four heads (Government of India, 2022).
1. Prohibition on financing
Section 12A(1) prohibits any person from financing activities prohibited under the 2005 Act, the United Nations (Security Council) Act, 1947, or another relevant Act or an order issued under such legislation concerning weapons of mass destruction and their delivery systems.
2. Freezing, seizure and attachment of assets
Section 12A(2)(a) empowers the Central Government to freeze, seize or attach funds, financial assets or economic resources owned or controlled by the relevant person, held on their behalf or at their direction, or derived from such assets.
3. Restriction on making resources available
Section 12A(2)(b) empowers the Central Government to prohibit the making available of funds, financial assets, economic resources or related services for the benefit of persons connected with prohibited activities.
4. Exercise of powers through designated authorities
Section 12A(3) provides for the exercise of the relevant powers through the authority specified under Section 7(1) of the 2005 Act.
Implementation depends on administrative procedures issued by the Department of Revenue, Ministry of Finance. The principal instrument is the Department of Revenue’s order dated 30 January 2023, bearing file number F. No. P-12011/14/2022-ES Cell-DOR and titled Procedure for implementation of Section 12A of the Weapons of Mass Destruction and Their Delivery Systems (Prohibition of Unlawful Activities) Act, 2005. This order established the initial implementation mechanism.
Further directions followed. The Department of Revenue issued an order dated 22 March 2023 concerning the competent authority and procedures for submitting delisting requests under relevant United Nations Security Council resolutions and for granting exemptions. An order dated 1 September 2023 designated the Director of FIU-India as the Central Nodal Officer for implementing Section 12A. FIU-India also lists a document titled Procedure for implementation of Section 12A of Weapons of Mass Destruction and Their Delivery Systems (Prohibition of Unlawful Activities) Act, 2005, identified as an Office Memorandum dated 20 October 2023. These documents should be read alongside the applicable designation, delisting and exemption procedures (FIU-India, n.d.).
The Director of FIU-India serves as the Central Nodal Officer under the relevant Department of Revenue order. The implementation mechanism involves coordination among the relevant ministries, regulators, State and Union Territory authorities, and reporting entities. Designated-list updates are communicated through the prescribed mechanism so that relevant institutions can screen transactions and take appropriate action.
Financial institutions and other covered entities are expected to screen relevant customers and transactions, prevent prohibited transactions involving designated persons or entities, and follow the prescribed process when potential matches arise. The authorities then verify the information and determine the action required under the applicable procedures. The framework also provides mechanisms for seeking exemptions, delisting and the release of assets in eligible cases (FIU-India, n.d.; FATF, 2024).
The precise requirements for screening, reporting, exemptions and the release of assets must be read from the applicable government orders and relevant sectoral directions.
Performance
FATF’s 2024 Mutual Evaluation Report provides an independent assessment of India’s counter-proliferation-financing framework. However, it evaluates India’s wider anti-money laundering, counter-terrorist financing and counter-proliferation-financing system rather than the 2022 amendment in isolation.
The report recognised that India had established a framework for implementing targeted financial sanctions related to proliferation financing. It also identified limitations in the evidence of practical implementation. In paragraph 412, on printed page 141, FATF reported that no property had been frozen under counter-proliferation targeted financial sanctions in India at the time of the on-site assessment. The report also recorded that no matches with the relevant designated lists had been reported through the prescribed screening mechanisms (FATF, 2024, p. 141).
Paragraph 413, on the same page, describes a one-time screening exercise undertaken by FIU-India in January 2023. The exercise generated more than 170,000 false positives from 12 financial institutions, but no funds or other assets belonging to designated entities were identified. FATF also cautioned that the exercise could not guarantee that no matches had existed before FIU-India assumed its role as the Central Nodal Officer (FATF, 2024, p. 141).
These findings require careful interpretation. The absence of identified assets does not, by itself, establish that the framework is ineffective, particularly given India’s assessed exposure to proliferation-financing risks. At the same time, the existence of legal provisions and screening procedures cannot alone demonstrate that the system is working effectively in practice.
FATF’s assessment therefore provides evidence of institutional progress alongside implementation challenges. Its findings also highlight the importance of continued outreach, training and supervision to improve compliance across relevant sectors.
The assessment does not establish the amendment’s independent contribution to India’s wider counter-proliferation efforts. A fuller evaluation would require more recent implementation data, including confirmed matches, asset-freezing actions, exemption requests and enforcement outcomes.
Impact
Financial institutions and regulated entities: The amendment has increased the importance of sanctions screening, transaction monitoring and reporting within the covered financial sector. Institutions must follow applicable procedures when identifying potential matches and dealing with funds or resources linked to designated persons or prohibited activities.
Designated persons and entities: The framework allows relevant assets to be frozen, seized or attached in accordance with the law and applicable procedures. Such action can restrict access to financial resources, while exemption, delisting and unfreezing procedures provide routes for eligible requests and cases of mistaken identification.
Exporters and dual-use businesses: The amendment may affect businesses indirectly when their financial transactions involve designated persons, entities or prohibited activities. This is a reasonable compliance consideration, but the available sources do not quantify the amendment’s effects on exporters or dual-use industries.
International obligations: The amendment strengthened India’s domestic legal framework for addressing proliferation financing in line with the international obligations cited by the government. FATF’s 2024 assessment recognised progress in India’s broader counter-proliferation-financing measures while also identifying areas where implementation could improve (FATF, 2024).
Emerging Issues
1. Statutory safeguards and procedural clarity
Section 12A grants significant powers to the Central Government but does not itself set out a comprehensive framework covering notice, hearing, review and decision timelines. Procedural safeguards and relief mechanisms are also addressed through executive orders. Clear, accessible and consistent procedures are important because an asset freeze can have immediate consequences for affected persons and businesses.
2. Scope of the financing prohibition
The reference to activities prohibited under “any other relevant Act” or an order issued under such legislation extends the provision beyond the 2005 Act alone. Its practical scope must be understood in conjunction with the relevant legislation, orders and designation procedures. The available evidence does not establish that this wording has been used to impose designations beyond the applicable sanctions framework.
3. Penalties and legal exposure
Section 17 of the 2005 Act expressly provides the penalty for contraventions of provisions other than Sections 8, 9 and 10, and Section 13(4). Since Section 12A is not among these exclusions, Section 17(1) applies to contraventions of Section 12A.
Section 17(1) states that a person who contravenes, abets or attempts to contravene a covered provision is punishable with imprisonment for a term of not less than six months and up to five years, and is also liable to a fine. Under Section 17(2), a person subsequently convicted of the same offence under Section 17(1) faces imprisonment for a term of not less than one year and up to seven years, along with a fine (Government of India, 2005, Section 17).
This distinction matters because the penalty is expressly prescribed by the statute, rather than merely inferred from FATF’s assessment. Liability in an individual case would depend on the applicable legal provisions and the facts established.
4. Coordination across implementation orders
The Department of Revenue’s order dated 30 January 2023 was followed by further directions, including the orders of 22 March and 1 September 2023 and the Office Memorandum dated 20 October 2023 listed by FIU-India. Separate documents also address delisting and exemptions. Financial institutions and other covered entities need clear guidance on the operative requirements and the relationship between these instruments (FIU-India, n.d.).
5. Screening accuracy and compliance costs
Effective sanctions screening requires accurate identification, verification and communication. Potential false matches can increase compliance costs and create difficulties for legitimate customers. The false positives recorded during the January 2023 screening exercise illustrate the operational challenges of list matching. Regular guidance, improved screening systems and clear escalation procedures can help institutions distinguish genuine matches from mistaken ones.
Way Forward
The following recommendations arise from the issues identified above; they are policy suggestions rather than findings established by the cited sources.
Improve transparency: Publish periodic aggregate data on screening matches, confirmed matches, asset freezes, exemption requests, delisting applications and their outcomes, subject to legitimate confidentiality requirements.
Strengthen procedural safeguards: Clarify review arrangements, decision timelines and remedies for mistaken freezes. Consider appropriate protection for bona fide third parties and provide accessible guidance on available relief.
Consolidate implementation guidance: Publish a clearly dated, consolidated set of operative procedures explaining the relationship between successive orders and subsequent clarifications.
Clarify the scope of obligations: Provide authoritative guidance on the relationship between Section 12A, relevant domestic laws, United Nations sanctions lists and the procedures for implementing designations.
Support effective compliance: Offer practical guidance on name matching, verification, reporting and the handling of potential false positives. Tailored guidance for smaller institutions and relevant non-financial businesses could help improve consistent implementation.
Monitor implementation: Future assessments should examine enforcement outcomes, compliance challenges, judicial decisions and follow-up findings from FATF.
India’s WMD Amendment Act, 2022, addressed an important gap in the country’s legal framework by expressly prohibiting the financing of specified unlawful activities and empowering the Central Government to take action against related assets. Subsequent government orders established procedures for implementing these powers, and FATF’s 2024 assessment recognised progress in India’s wider counter-proliferation-financing framework.
Yet the existence of a legal prohibition is only the starting point. The effectiveness of the framework also depends on accurate screening, coordination among authorities, proportionate procedures and evidence of implementation. More transparent reporting and clearer procedural guidance would help establish whether the amendment is translating its legal objectives into measurable results.
References
Financial Action Task Force. (2024). Anti-money laundering and counter-terrorist financing measures: India—Mutual evaluation report. FATF, APG and EAG. https://www.fatf-gafi.org/content/dam/fatf-gafi/mer/India-MER-2024.pdf.coredownload.inline.pdf
Financial Intelligence Unit–India. (n.d.). Section 12A of WMD and their delivery systems (Prohibition of Unlawful Activities) Act, 2005. Ministry of Finance, Government of India. https://fiuindia.gov.in/files/AML_Legislation/DOR_Section12A_WMD.html
Financial Intelligence Unit–India. (2023, March 22). Competent authority and procedure for submitting de-listing requests to relevant Sanctions Committee under UNSC Resolution 1730 or its successor resolutions, listed in pursuance to UNSC Resolution 1718/2231 or its successor resolutions, and mechanism for exemptions to be granted to designated persons/individuals or entities in accordance with UNSC Resolution 1718/2231 or its successor resolutions [Order]. Department of Revenue, Ministry of Finance, Government of India. https://fiuindia.gov.in/pdfs/AML_legislation/Delisting.pdf
Government of India. (2005). The Weapons of Mass Destruction and Their Delivery Systems (Prohibition of Unlawful Activities) Act, 2005 (Act No. 21 of 2005). India Code. https://www.indiacode.nic.in/bitstream/123456789/2017/1/a2005-21.pdf
Government of India. (2022). The Weapons of Mass Destruction and Their Delivery Systems (Prohibition of Unlawful Activities) Amendment Act, 2022 (Act No. 14 of 2022). https://www.indiacode.nic.in/repealedfileopen?rfilename=A2022-14.pdf
Lok Sabha. (2022). The Weapons of Mass Destruction and Their Delivery Systems (Prohibition of Unlawful Activities) Amendment Bill, 2022 (Bill No. 96 of 2022). PRS Legislative Research. https://prsindia.org/files/bills_acts/bills_parliament/2022/Weapons%20of%20Mass%20Destruction%20Bill,%202022.pdf
Ministry of External Affairs. (2022, November 10). Notification S.O. 5230(E): Commencement of the Weapons of Mass Destruction and Their Delivery Systems (Prohibition of Unlawful Activities) Amendment Act, 2022. The Gazette of India. https://egazette.gov.in/WriteReadData/2022/240176.pdf
PRS Legislative Research. (2022, April 5). The Weapons of Mass Destruction and Their Delivery Systems (Prohibition of Unlawful Activities) Amendment Bill, 2022. https://prsindia.org/billtrack/the-weapons-of-mass-destruction-and-their-delivery-systems-prohibition-of-unlawful-activities-amendment-bill-2022
About the Contributor
Ninchen Tamang is a Research & Editorial intern at Impact and Policy Research Institute (IMPRI). She holds a Master’s degree in Political Science, with primary research interests spanning geopolitics, international relations, foreign policy, and South Asian studies.
Acknowledgement
The author extends sincere gratitude to the Impact and Policy Research Institute (IMPRI) team for their expert guidance and constructive feedback throughout the process. I also extend my sincere thanks to Anamika PK and Tanisha for their constructive reviews and editorial support.
Reviewers
Anamika P and Tanisha
Disclaimer
All views expressed in the article belong solely to the author and not necessarily to the organization.
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